Claim against PricewaterhouseCoopers LLP London Stock Exchange
RNS Number : 5217V
Watchstone Group PLC
07 August 2020



Watchstone Group plc


Claim against PricewaterhouseCoopers LLP


Further to its previous announcement on 29 August 2019, Watchstone Group plc (LON:WTG) ("Watchstone" or "the Company") announces that it has filed and served a claim against PricewaterhouseCoopers LLP ("PwC") in the High Court.


The claim against PwC is for damages or equitable compensation of £63m plus exemplary damages, equitable compensation, interest and costs. Watchstone's claim against PwC is for breach of contract and/or breach of confidence and/or breach of fiduciary duty and/or unlawful means conspiracy ("Claim").


The Claim arises from an unauthorised and illicit channel of communication between PwC, Watchstone's trusted restructuring and technical accounting adviser at the time, and Greenhill & Co ("Greenhill"), a corporate finance adviser to Slater & Gordon (UK) 1 Limited ("S&G"), procured during the period of due diligence and negotiation relating to the £637m disposal of the Professional Services Division ("PSD") in 2015.


Watchstone claims that Greenhill established this back-channel with PwC by one or more secret meeting(s) between representatives of Greenhill and PwC, at which PwC unlawfully disclosed information pertaining to Watchstone which was, and which it knew to be, confidential. This information was then factored into S&G's tactics and strategy for the negotiations with Watchstone leading to the acquisition of the PSD. S&G thereby gained an unfair advantage in those negotiations, which it exploited in order to purchase the PSD at a lower price than it would otherwise have had to pay. This caused Watchstone to suffer significant loss.


Watchstone did not discover (and was not told of) the various breaches by PwC referred to above, and was therefore unaware that its confidential information had been provided to Greenhill and S&G until it received third party disclosure from Greenhill in the proceedings with S&G on 19 July 2019 almost three years after S&G's claim was first threatened. PwC never informed Watchstone of the meeting or meetings, the disclosure or the breaches that occurred.


Even today, PwC continues to refuse to reveal the identity (other than to confirm that the person was male) of the PwC representative (referred to in contemporaneous emails as the "Head of PwC Restructuring") who met with and communicated with Greenhill. It has, however, confirmed that that individual attended a meeting on 15 January 2015 with Greenhill and that he was contacted by them on another occasion in February 2015 to seek to arrange a further meeting. Watchstone paid PwC in excess of £5m in fees in 2014 and 2015 for its independent review into, inter alia, Group accounting policies and cash generation. PwC had no role in respect of the disposal of the PSD.


The Particulars of Claim will be available on written application to the Commercial Court, alternatively online at the HM Courts & Tribunals e-filing Service:  HMCTS e-filing service at, subject to the payment of the prescribed fee. The claim number is CL-2020-000507, High Court of Justice, Queens Bench Division, Commercial Court.


Watchstone will make further announcements in due course, as appropriate.


The release of this announcement has been authorised by Stefan Borson, Group Chief Executive Officer and Company Secretary of the Company.



For further information:


Watchstone Group plc                                             

Tel: +44 (0)20 7930 8033

Alex Nekrassov

Dimitris Dimitriadis



WH Ireland LLP, Nominated Adviser and Broker





Tel: +44 (0)20 7220 1666

Chris Hardie

Lydia Zychowska



Notes to editors:


In October 2019, Watchstone settled the High Court proceedings issued by S&G in June 2017 relating to the sale of the PSD. The settlement included the unconditional withdrawal by S&G of all of its claims or potential claims against the Company relating to the historical sale of the PSD in May 2015. The Company also agreed not to pursue its counterclaim against S&G.


The settlement provided for £11m of the £50m being held in escrow to be released to S&G with the balance of £39m and all accrued interest from May 2015 being released to the Company.


As part of the S&G proceedings, the High Court considered the subject matter of the Claim and Mr Justice Bryan found that Watchstone had a real prospect of success. The judgment of Mr Justice Bryan is available here:


Watchstone has appointed solicitors Dorsey & Whitney (Europe) LLP to represent the Company in relation to these proceedings.


Summary of Particulars of Claim:


IN THE HIGH COURT OF JUSTICE                                             Claim No. CL-2020-000507















1.       The Claimant ("Watchstone", formerly "Quindell") claims against the Defendant ("PwC") in breach of contract, breach of confidence, breach of fiduciary duty and/or unlawful means conspiracy. The basis for the claim is that, in early 2015, PwC, Quindell's adviser, unlawfully disclosed Quindell's confidential information to Greenhill & Co. ("Greenhill"), a corporate finance adviser to Slater & Gordon (UK) 1 Limited ("S&G"), with whom Quindell was in negotiations for the sale of certain subsidiaries constituting its Professional Services Division (the "PSD"). The sale of the PSD to S&G ultimately completed in May 2015 for an upfront cash purchase price of £637 million (the "Sale").

2.       By late 2014, Quindell had been the subject of extensive adverse publicity in relation to its accounting practices and its senior management. A new board, a new non-executive chairman, and new advisers were brought in with a view to stabilising Quindell's position and restoring its reputation.

3.       The new board (initially in conjunction with its lending banks, but ultimately on its own) appointed PwC to carry out a review of its finances and to recommend any changes needing to be made to its accounting practices, in the hope that that would, once any such changes had been implemented, provide reassurance to the market and to Quindell's lenders. PwC was provided with extensive access to confidential information concerning Quindell's finances in order to enable it to carry out that review and to advise. Quindell paid PwC over £5m (excluding VAT) in fees in 2014 and 2015 for its review.

4.       Shortly after PwC had been so retained, Quindell was approached by S&G with an indicative offer to buy the PSD and, after an initial transaction in which S&G bought a number of case files from Quindell, it entered into a period of exclusive due diligence, which was carried out from January to March 2015.  PwC was not retained as an adviser on the Sale, in relation to which it had no role.

5.       From the outset of the due diligence, S&G was very keen to see the draft (and subsequently the final) report in which PwC would set out its findings about Quindell.

6.       S&G and its advisers considered in email discussions ways in which they might try to access the report without Quindell's knowledge, for example by establishing a secret back channel with Quindell's lending banks, who had initially instructed PwC jointly with Quindell. They decided not to pursue that idea, but Mr. Gareth Davies, a Managing Director who worked for Greenhill in London, told his colleagues that he had spoken to an acquaintance who was the "head of PwC restructuring" (the "PwC Head of Restructuring"), that he had thereby discovered that that partner was advising Quindell, and that he had arranged to meet with him for a "quiet coffee" to discuss matters. Mr. Davies remarked in relation to the strategy to contact PwC directly that "if we find [Quindell] are in a real corner we can take them to the cleaners [...]". Mr. Davies asked his colleagues what questions they would like him to ask the PwC Head of Restructuring, and they gave him some ideas, including specific and price sensitive matters relating to the wider Quindell group. At that time, Quindell was a high profile and heavily traded public company listed on AIM.

7.       Mr. Davies reassured his colleagues that Quindell would not find out about the "quiet coffee", saying "We can assume it will go no further". Mr. Davies' colleagues said that would be "very helpful" and provided questions that they knew related to confidential, commercially sensitive and potentially price sensitive matters in respect of not only the PSD but also Quindell (i.e., the vendor and not the acquisition target itself), including its financial viability and options.

8.       On 15 January 2015, the PwC Head of Restructuring had a secret meeting with Mr. Davies. Immediately following the meeting, Mr. Davies sent an email note to others at Greenhill, setting out what had been discussed and what he had learnt. When asked whether he intended that the email report should be passed to S&G's then Executive Director of UK and Europe, Mr. Davies told them: "Yes. Just stress to him not to pass on pls. If there is anything he wants to raise with pwc I can do it next week".

9.       Mr. Davies' email recorded in some detail what the PwC Head of Restructuring had told him, including that Quindell would run out of cash in mid-2015 and that the PwC Head of Restructuring would "quietly" look further into some matters that went to value for Mr. Davies and his client, S&G. Mr. Davies also recorded that the PwC Head of Restructuring had suggested that S&G should bid for the entire plc and break it up. The PwC Head of Restructuring also provided Mr. Davies with confidential details of Quindell's board's thoughts and plans.

10.     That email taken as a whole was a summary of PwC's expert independent analysis and assessment of Quindell's businesses, its finances and its strategy, all of which was confidential.

11.     Further or alternatively, the email contained the following categories of information, each of which was confidential: 

(1)   the nature, detail and genesis of the review that PwC was carrying out, and the report that it was preparing, for Quindell;

(2)   information concerning Quindell's business and finances (including that, as Mr. Davies put it in his email, Quindell was "running out of cash mid-15"); and

(3)   details of Quindell's board's approach and thought processes in relation to its negotiation with S&G.

12.     Key members of the Greenhill team advising S&G replied that the information was "extremely helpful".  That information was then fed into the strategy and tactics which S&G, assisted by Greenhill, was deploying in its sale negotiations.

13.     In mid-February 2015, Quindell and S&G began to trade figures in a series of telephone calls between David Currie, then non-executive Interim Chairman of Quindell, and Andrew Grech, the Group Managing Director of S&G's listed Australian parent. It can be seen from the parties' respective internal emails and meeting notes that at a specific point in time S&G was willing to pay £700 million for the PSD and Quindell was willing to consider a sale at that price.

14.     However, Mr. Grech ultimately stood firm at £640 million, an amount which Quindell and its advisers, in the straitened financial circumstances in which Quindell found itself, felt unable to refuse. Quindell's case is that S&G was influenced and emboldened in taking that stance by his knowledge of the confidential information from PwC and its knowledge that Quindell was not aware that S&G was in possession of that information.

15.     PwC never informed Watchstone, contemporaneously or at all, about the 15 January 2015 meeting or the disclosure of information to Greenhill. Watchstone found out about it only by happenstance in July 2019 because Mr. Davies' note of the meeting appeared in third party disclosure provided by Greenhill in litigation between Watchstone and S&G. 

16.     On the basis of those facts, Watchstone claims in:

(1)     breach of contract, specifically the confidentiality clause in PwC's Terms and Conditions;

(2)     breach of PwC's equitable duty of confidence, on the basis that PwC received information in relation to which Watchstone had a reasonable expectation of confidentiality;

(3)     breach of fiduciary duty, on the basis that Watchstone breached its duties of loyalty by disclosing the confidential information and by not reporting to Watchstone that it had done so; and

(4)     unlawful means conspiracy, on the basis that S&G, PwC and Greenhill conspired to pass the confidential information to S&G, by the unlawful means of the breach of PwC's duties of confidence, with the intention that it would be used to S&G's advantage in the negotiation, which would cause harm to Quindell because it would have to pay a higher purchase price than if S&G had not received the information.

17.     Quindell's loss is the difference between the figure that S&G was willing to pay as set out above and the figure that it ultimately did pay. That case falls to be assessed on a loss of a chance basis because it requires Watchstone to show what a third party, S&G, would hypothetically have done in the relevant counterfactual. On the basis of the figures above, Quindell says that the value of its lost chance is £63 million.

18.     Furthermore, in view of deliberate and egregious nature of PwC's breaches of confidence, and its illicit conspiracy with Greenhill and S&G, which caused the losses claimed, Watchstone's primary case is that the Court should award exemplary damages and compound interest.

19.     PwC has to this day refused to tell Watchstone the identity of the person identified in the documents as the "head of PwC restructuring" despite that being information which Watchstone, as a former client with a legitimate interest in and grievance about such person's conduct, has a right to know.  Watchstone reserves its rights against such individual, whose identity must be disclosed in these proceedings.




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